John Stern: No, that did not. No, that did not. Like for example, this quarter, we had 20 basis points of RWA actions, which included some of the asset reduction you saw our earning assets lower, for example, as well as some other transactions embedded. So, we separate out core earnings — when we were talking about 20 to 25 basis points, core earnings from other RWA optimization transactions that we have the ability to do.
John Pancari: Okay. And then separately, is there any OpEx impact of the — of now needing to conform to the Category III versus the more immediate requirements of Category II? Anything on the expense side, and then separately, on the — on your margin bottoming comment, anything in terms of the trajectory in the margin that you would expect after you see this bottoming as we head into 2024?
John Stern: Yes. So in terms of OpEx, no, there’s no further investment. You may recall before tailoring, we had many of the same rules and standards that we had in terms of liquidity rules and reporting and all those sorts of things. So, we have all the capabilities built up or can quickly get to that level from an operational standpoint. So, there’s no worries there. In terms of the net interest margin, we mentioned just a little bit of pressure in the fourth quarter and then bottoming out, likely stable. But still dependent on interest rates, quite frankly, at that particular time.
Operator: And next, we’ll go over to John McDonald with Autonomous Research. Please go ahead. Oh, one moment here. We’ll go to Scott Siefers with Piper Sandler. Please go ahead.
Scott Siefers: Just as it relates to sort of the balance sheet growth dynamic. So great to see you out of the Fed restriction. Do you see any risk that you’d exceed $700 billion in assets organically, or come into contact with any of the other Cat II restrictions organically in a timeframe that would inject you to Cat II rules before your peers would have to get there under new levels? In other words, I’m just trying to kind of make sure that this is indeed just a full free — so just curious of your thoughts there.
John Stern: It is. As Andy mentioned, there’s asset cap so that we have complete flexibility here on our balance sheet going forward. So if we elect to grow or want to grow, and we do want to grow in a capital-efficient manner, we will do so. What I would say, though, is that we’re going to be emphasizing higher return loans and deemphasizing lower return type of assets. And I think that will manifest itself as the balance sheet churns. And in addition to that, I would just highlight that in this environment right now, the loan outlook is pretty is pretty low. The demand for loans is quite low, given a number of different reasons out there. But that gives us kind of the confidence that we have a lot — have more time and flexibility here.
Scott Siefers: Yes. Perfect. Okay. And then I think you might have touched on this in an earlier question, but maybe if you can sort of re-walk us through the sort of AOCI burn-down and cash flow expectations coming off the — both the AFS and HTM books. And then, I think you might have given the duration of the AFS book, but do you have that for the HTM book as well?
John Stern: Sure. So in terms of the AFS and HTM, we’re at about — in terms of balances, about $162 billion or so, and it’s about a 50-50 mix as we mentioned on the call, in terms of AFS and HTM. So, we have about, as I mentioned, $3 billion of runoff per quarter on average just given the current interest rate environment and things of that variety. In terms of our profile, we’ve been able to hedge about 30% of the fixed rate portion of the AFS book. And so that’s what has driven the duration of that particular book in the 3.5 — less than 3.5 years as we have. That HTM book is principally all agency mortgage-backed securities, which have longer lives. And so, it’s more in the six or so range in terms of the duration of that book.
